Question

On January 1, 2021, Twister Enterprises, a manufacturer of a variety of transportable spin rides, issues $470,000 of 8% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year.

If the market interest rate is 7%, the bonds will issue at $513,221. Record the bond issue on January 1, 2021, and the first two semiannual interest payments on June 30, 2021, and December 31, 2021.

(Round your answers to the nearest dollar amount.)

This is what I have so far:

1             January 01, 2021        Cash      513,221 (Debit)

Premium on Bonds Payable         43,221 (Credit)

Bonds Payable                  470,000 (Credit)

2             June 30, 2021             Interest Expense              17,963 (Debit)

Premium on Bonds Payable         837 (Debit)

Cash                     18,800 (Credit)

3             December 31, 2021      Interest Expense              17,933 (Debit)

Premium on Bonds Payable         867 (Debit)

Cash                     18,800 (Credit)

Answer 1

Answer Journal Entry General Journal Debit Credit Date Cash Jan, 01 2021 $513,221 $470,000 Bonds Payable Premium on Bonds Payable ($513,221 - $470,000) $43,221 (To record the issue bonds at premium) June, 30 2021 Interest Expense ($513,221 x 7% x 1/2) $17,963 Premium on Bonds Payable ($18,800 $17,963) ($470,000 x 8% x 1/2) (To record the interest expenses) $837 $18,800 Cash Interest Expense [($513,221 - $837) x 7% x 1/2] Premium on Bonds Payable ($18,800 $17,933) ($470,000 x 8% x 1/2) (To record the interest expenses) Dec, 31 2021 $17,933 $867 $18,800 Cash